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Pernod Ricard steps up Russia exports
By Scheherazade Daneshkhu, Consumer Industries Editor
Financial Times
Sept 3 2014
Pernod Ricard, producer of Absolut vodka and Chivas Regal whisky, is
ramping up exports of its brands to Russia in anticipation of possible
retaliation by Moscow against Western sanctions.
Pierre Pringuet, chief executive of the French distiller - the world's
largest after Diageo of the UK - said: "We are importing as much as we
can for our [Russian] inventories because an embargo or retaliatory
action could happen any time."
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http://www.ft.com/cms/s/0/045f6736-3386-11e4-85f1-00144feabdc0.html#ixzz3CJ5tPTtE
The group is shipping extra supplies of its Jameson Irish whiskey,
Ballantine's scotch, Absolut vodka and wines.
The disclosure underscores the uncertainty faced by businesses
operating in Russia as Europe prepares to impose tougher sanctions
against Moscow over its attitude to the territorial independence of
Ukraine, despite signs of moves towards a ceasefire on Wednesday.
Pernod Ricard, which last week reported a 13 per cent fall in annual
profits, mainly because of a drop in sales of its upmarket cognac and
whiskies in China following the government crackdown on lavish
entertaining, said the situation in Russia was its biggest concern.
"Russia is a serious worry," Mr Pringuet said. The group's action is
aimed at defending its position in the country where sales increased 5
per cent in the year to June 30, despite the escalating political
tension.
Mr Pringuet said the group's Ararat brandy produced in Armenia would
be unlikely to be affected by a potential backlash against Western
imports, but the brand accounted for just one-third of its total
Russian sales.
Mr Pringuet was more optimistic about China, where the company has
suffered a 23 per cent drop in full-year sales but recorded an
improvement in its final quarter.
"We think there is a gradual improvement," he said, adding that there
appeared to be fewer government swoops on banqueting outlets. The
company had shifted its focus from the top end of the market by
introducing lower-priced premium drinks to target the middle class.
Mr Pringuet, who will hand over to Alexandre Ricard, nephew of the
company's founder, when he turns 65 in January, acknowledged that the
US performance of its Absolut brand - bought for EURO 5.3bn in 2008 - had
been a disappointment.
Though the group had accelerated the brand's development outside the
US - its single biggest market - it has lost market share within the
country.
"We are not pleased with the performance," he said, which he
attributed in large part to a proliferation of "fancy-flavoured"
vodkas and start-ups with "questionable" craft claims, given their
sometimes industrial-scale alcohol production.
"Though 99 per cent or more of these new entrants won't survive, they
do take market share," he said.
Mr Pringuet said that despite the group's relatively high debt, it
still had headroom to make acquisitions running into billions of
euros. "Maybe not EURO 10bn but a few billion," he said.
http://www.ft.com/cms/s/0/045f6736-3386-11e4-85f1-00144feabdc0.html#axzz3CJ5mGd7A
From: A. Papazian
By Scheherazade Daneshkhu, Consumer Industries Editor
Financial Times
Sept 3 2014
Pernod Ricard, producer of Absolut vodka and Chivas Regal whisky, is
ramping up exports of its brands to Russia in anticipation of possible
retaliation by Moscow against Western sanctions.
Pierre Pringuet, chief executive of the French distiller - the world's
largest after Diageo of the UK - said: "We are importing as much as we
can for our [Russian] inventories because an embargo or retaliatory
action could happen any time."
High quality global journalism requires investment. Please share this
article with others using the link below, do not cut & paste the
article. See our Ts&Cs and Copyright Policy for more detail. Email
[email protected] to buy additional rights.
http://www.ft.com/cms/s/0/045f6736-3386-11e4-85f1-00144feabdc0.html#ixzz3CJ5tPTtE
The group is shipping extra supplies of its Jameson Irish whiskey,
Ballantine's scotch, Absolut vodka and wines.
The disclosure underscores the uncertainty faced by businesses
operating in Russia as Europe prepares to impose tougher sanctions
against Moscow over its attitude to the territorial independence of
Ukraine, despite signs of moves towards a ceasefire on Wednesday.
Pernod Ricard, which last week reported a 13 per cent fall in annual
profits, mainly because of a drop in sales of its upmarket cognac and
whiskies in China following the government crackdown on lavish
entertaining, said the situation in Russia was its biggest concern.
"Russia is a serious worry," Mr Pringuet said. The group's action is
aimed at defending its position in the country where sales increased 5
per cent in the year to June 30, despite the escalating political
tension.
Mr Pringuet said the group's Ararat brandy produced in Armenia would
be unlikely to be affected by a potential backlash against Western
imports, but the brand accounted for just one-third of its total
Russian sales.
Mr Pringuet was more optimistic about China, where the company has
suffered a 23 per cent drop in full-year sales but recorded an
improvement in its final quarter.
"We think there is a gradual improvement," he said, adding that there
appeared to be fewer government swoops on banqueting outlets. The
company had shifted its focus from the top end of the market by
introducing lower-priced premium drinks to target the middle class.
Mr Pringuet, who will hand over to Alexandre Ricard, nephew of the
company's founder, when he turns 65 in January, acknowledged that the
US performance of its Absolut brand - bought for EURO 5.3bn in 2008 - had
been a disappointment.
Though the group had accelerated the brand's development outside the
US - its single biggest market - it has lost market share within the
country.
"We are not pleased with the performance," he said, which he
attributed in large part to a proliferation of "fancy-flavoured"
vodkas and start-ups with "questionable" craft claims, given their
sometimes industrial-scale alcohol production.
"Though 99 per cent or more of these new entrants won't survive, they
do take market share," he said.
Mr Pringuet said that despite the group's relatively high debt, it
still had headroom to make acquisitions running into billions of
euros. "Maybe not EURO 10bn but a few billion," he said.
http://www.ft.com/cms/s/0/045f6736-3386-11e4-85f1-00144feabdc0.html#axzz3CJ5mGd7A
From: A. Papazian